Digital Economy Bill heralds Government plans to tackle P2P file-sharing

The Digital Economy Bill echoes some of the key recommendations set out in the Government’s Digital Britain White Paper. To many, the most intriguing and controversial aspects of this Bill are the provisions relating to peer-to-peer (P2P) file-sharing.

Much Obliged

The Government’s latest consultation response confirms its intention to introduce two new obligations on ISPs:

“1 To send letters to subscribers identified by rights holders as allegedly responsible for a breach of copyright.
2. ISPs will be required to collect anonymised information on serious repeat infringers (based purely on the notifications provided by rights holders). This information will be made available to rights-holders together with personal details on receipt of a court order.”

The Government is confident that these two primary obligations will reduce the number of people engaged in file-sharing by 70%.

Details of how these will work in practice are still thin on the ground. The Digital Economy Bill includes some useful detail, for example on the content of notifications, but many of the thorny issues remain to be tackled. There appear to be no limits on the number of requests rights holders can make of ISPs, nor any guidance on standards of evidence to be provided. It is likely these two issues alone will be a source of intense lobbying as rights holders and ISPs seek to defend their evolving business models. The Government consultation response suggests that “it would be sensible for these practical details to be agreed between industry parties”. It might be sensible but it is nevertheless far from likely that this will actually happen. If “industry” is indeed unable to develop a code then Ofcom will be required to do so.

Technical Measures

The third, and most controversial, element of the plans as set out in the Digital Economy Bill is that it allows the Secretary of State (currently Lord Mandelson) to oblige ISPs to impose technical measures on serious infringers. The Government’ consultation response proposes:

“3 Secretary of State to have a power to direct Ofcom to evaluate the effectiveness of technical measures and a power to introduce, via secondary legislation, a third obligation on ISPs to impose technical measures on serious infringers.”

The wording of the Draft Digital Economy Bill (s124H) makes it clear that this power would be exercised entirely at the Secretary of State’s discretion, even if Ofcom were to recommend against it:

“ Obligations to limit internet access
(1) The Secretary of State may at any time by order impose a technical obligation on internet service providers if the Secretary of State considers it appropriate in view of—
(a) an assessment carried out or steps taken by OFCOM under section 124G; or
(b) any other consideration.”

This provision also allows the Secretary of State to specify criteria for taking technical measures against a subscriber and the steps to be taken. Critics will argue that any measures that could require ISPs to cut off accounts, and the criteria for their application, should be set out clearly in primary legislation and be subject to the rule of law.

It’s Written in Code

While the Draft Digital Economy Bill provides the Secretary of State with the power to oblige ISPs to take technical measures, Ofcom may develop a code on such measures which must be ‘objectively justifiable’, ‘proportionate’ and ‘transparent’. The consent of the Secretary of State is required to make or amend this code, and while the code itself may be subject to annulment by resolution of either House of Parliament, the Secretary of State’s decisions to impose technical obligations will not be. How the code is drafted will no doubt attract great interest, and, the manner in which technical measures are implemented may be subject to legal challenge.

A Legal Disconnection?

The Government’s consultation response states:

“…the legislation will give the Secretary of State the power to oblige ISPs to impose specified technical measures on a subscriber once their alleged level of infringement has placed them on the serious infringer list. This raises some important issues – not least in terms of ensuring that subscribers have a clear route of appeal – and if technical measures are applied we intend to allow a further appeal from the original appeals body set up by Ofcom to a First Tier Tribunal.”

The response states that technical measures shall include disconnection, and does not exclude the possibility that customer accounts could be cut-off solely on the basis of information provided by rights holders and without a prior fair and impartial hearing or trial. The Government seems to be compensating for this by introducing, not just one but two, appeal procedures.

There has been much debate recently as to whether such a process would be compliant with Human Rights and the Telecoms Package, which has recently been approved by the European Parliament. While the point remains contentious, it seems unlikely that a procedure that specifies that customers may be cut-off from the Internet when their activity levels (as identified by rights holders) reach certain levels, without an independent review of evidence by a court or impartial tribunal, would comply with the new compromise wording in the Telecoms Package. Nor would it easily constitute a justified exception to the right to a fair trial enshrined in the European Convention for the Protection of Human Rights.

Paying the Bill

The Government’s consultation response sets out what appears to be a rather unsatisfactory and unclear compromise position on costs:

“…The legislation will therefore amend our proposal so that all costs will be covered by the party that incurs them. However rights holders will be charged a standard flat fee for each notification they send to an ISP. This flat fee will be based on the average cost to an ISP of processing a notification (to be established via an audit by Ofcom). The fee will apply to all ISPs in scope. It will also be set at such a rate so that in effect ISPs and rights holders share the cost of notifications.”

Quite how a fee could be calculated that is both based on payment of an average cost to an ISP, yet also operates to share the cost of notifications, remains to be seen. ISPs may be disappointed if they are not compensated in respect of all of the obligations. Those with lower expectations or different interests may point out that some sort of fee is better than no fee, and it would at least contribute to the costs incurred.

Interestingly, and by contrast, the Digital Economy Bill does not require a standard fee to be paid by rights holders to ISPs. Rather it provides the Secretary of State with a broad power to specify cost obligations, which may relate to payments by rights holders to ISPs and payments by both ISPs and rights holders to compensate Ofcom. ISPs will be concerned that the provisions do not contain a firm legal commitment to compensate them. In the absence of express provisions in the legislation, ISPs may feel hard done by. After all, if the Government is serious about compensating ISPs, albeit perhaps only in part, then why is this not set out as an obligation in the legislation? Ultimately, it is certain that the cost of these proposals will, one way or another, have to be passed on to consumers.

Rewriting Copyright

The Secretary of State has also reserved to himself a broad power to amend copyright law for the purpose of preventing or reducing the infringement of copyright by means of the Internet. Such a wide-ranging power is unusual, and one would normally expect to see substantive changes to copyright law approved by Parliament rather than delegated. The move appears to be in response to the UK Intellectual Property Office’s recent consultations and reviews of copyright law and could enable the Secretary of State to make it easier to prove online copyright infringement.

Around the Houses and Up the Garden Path

It is something of a relief, that after nearly two years of debate and discussion, the Government’s plans to reduce P2P file-sharing have finally been transposed into draft legislation that can be reviewed and debated by the houses of Parliament. However, the current version of the Bill seems disappointingly opaque and at times fails to transpose the spirit of the Government’s consultation response into meaningful legislative commitments. The Digital Economy Bill is drafted to grant the Secretary of State (Lord Mandelson is also the Bill’s sponsor) considerable power and discretion to determine key issues such as when and how to require ISPs to disconnect people’s Internet accounts, who should foot the bill for these proposals and how copyright law evolves. The Second reading - the general debate on all aspects of the Bill in the House of Lords - takes place on 2 December.